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Marley Spoon (ASX:MMM) shares tank 30% on Q3 result

Shares in meal kit delivery company Marley Spoon AG (ASX: MMM) took a brutal 30% dive yesterday after the company released its third quarter results for FY21.

It’s been a wild ride for shareholders of Marley Spoon over the past year and a half. The company was a major Covid lockdown beneficiary causing sales to double between FY19 and FY20.

Since reaching over $3.50 per share last year, Marley Spoon’s market valuation has tumbled, with shares now changing hands for just over $1.

Source: Rask Media MMM 2-year share price chart

Q3 results

Overall, Marley Spoon brought in net revenue of €79.2 million. This was up 14% on the prior corresponding period (pcp), but slightly down from €80.6 million in Q2.

While the business continues to invest for growth, it reported an operating EBITDA loss of €13 million.

Management said that due to “volatile consumer behaviour”, revenue guidance was downgraded to between 26-28% (previous guidance was 30-35%).

The business finished the quarter with a cash balance of €33 million, up from 17€ on the pcp.

Subscriber numbers

Across the quarter, Marley Spoon recorded an increase in active subscribers across all its key markets when compared to this time last year.

However, when compared to Q2, these numbers have actually all gone backwards except for its Australian market. On the issue, management have noted that customers in the US and Europe have demonstrated “extensive post-lockdown vacationing”.

However, whether customers have been vacationing, or returning to supermarkets is the big question that is likely weighing on the share price.

Cash burn from operating activities was €7.7 million during the quarter. The business recently entered into another asset financing facility with National Australia Bank (ASX: NAB).

My take

If Marley Spoon was to achieve a midpoint of FY21 revenue guidance of 27%, that means it would need to make €85.3 million in Q4, which is more than all of the previous quarters this year.

While it’s true there’s a large addressable market that’s largely unpenetrated by meal kit services, I’m not entirely convinced that Covid has caused a permanent shift in consumer behaviour. I’ll be watching from the sidelines for this one.

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